Introduction

Tencent Company was founded in 1998, with its headquarters located in Shenzhen, China. The company is a cultural as well as internet-based technology enterprise. Its mission is to advance the quality of people’s lives through value-added internet services. Due to Tencent’s fabulous growth, it has achieved delivery of integrated internet solutions to more than 1 billion internet subscribers (netizens). The company has emerged as a leader within the industry alongside being a global developer of innovative digitized technology solutions. Therefore, the main aim of the company is to provide technological services that connect everything in the globe.Tencent is passionate about increasing the quality of life the people enjoy through digitized innovation. The company is a multinational investment that delivers its products and services globally.

Life Cycle

It has subsidiaries with various specializations in artificial intelligence, technology, internet-based services, and products and technology.  The company is a growth phase of maturity as a life cycle stage leading to increment of revenues collected by the company. Tencent experienced a good in 2018 where it surpassed the market value of US$500 billion; hence it is the first Asian corporation that has passed the valuation mark. Through continued investments, Tencent has launched various projects from 2015 till 2018, ranging from baking services like the WeBank to entertainment and sports, the company acquired a more significant stake in China Music Corporation; also Tencent gained a minor stake in Robot Entertainment.

In 2015, Tencent signed a multi-million deal with National Basketball Association (NBA) to broadcast the American basketball games in China. Therefore the company has been growing steadily within its market for a decade with a rise in the stock of about 3.17% until August 2018 when the company reported a profit decline. The profit decline was within the second quarter of the fiscal year 2018. The end of growth streak was due to the government’s policy scrutinizing the gaming business; thus the company’s investment gains a slide. Currently, Tencent Holdings Ltd has shown signs of decline, because the shares of the internet mogul have dropped by 3% in Hong Kong’s morning trade after the report of a rare drop in quarterly revenue.The extending slide wiped the company’s market value by about $50 billion, and this sell-off affected several other internet stocks in China.

Strategies to Control Decline

However, because Tencent is one of the leading innovative companies in the world, it has formulated various control strategies to combat the observed decline in profit. Apart from the gaming business, Tencent has fostered the cutting-edge technologies development like cloud computing andmassive data. Moreover, for the effective performance of Tencent, a sketch of the structural conditions that control the hospitability of the declining environment whether it affects the competitive advantage of the company. The level of competition depends on the readiness of the gaming industry’s participants to pull-out to reduce shrinking of the sales in the industry.

Therefore, the company should foster technological improvements for substitute products which are cost effective and of high quality. Also, the company should perceive the future market demand as well as the profitability of supplying the declining market. During the decline, Tencent should emphasize the characteristics of the remaining market segments to impact competition during the declining phase that is highly associated with the maturity stage of the industrial life cycle. The company’s position in the industry or declining market segment is also vital in determining the declining demand and how it can exit the barriers.

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